RENEWABLE ENERGY PROSPECTS: GERMANY

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Material in this publication may be freely used, shared, copied, reproduced, printed and/or stored, provided that all such material is clearly attributed to IRENA and bears a notation that it is subject to copyright (© IRENA 2015).

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About IRENA

The International Renewable Energy Agency (IRENA) is an intergovernmental organisation that supports countries in their transition to a sustainable energy future, and serves as the principal platform for international co-operation, a centre of excellence, and a repository of policy, technology, resource and financial knowledge on renewable energy. IRENA promotes the widespread adoption and sustainable use of all forms of renewable energy, including bioenergy, geothermal, hydropower, ocean, solar and wind energy, in the pursuit of sustainable development, energy access, energy security and low-carbon economic growth and prosperity.

Acknowledgements

This report has benefited from valuable comments or guidance provided by the German Federal Ministry for Economic Affairs and Energy (BMWi), with special thanks to Jörn Rauhut, Thorsten Rüther, Martin Schöpe and Ellen von Zitzewitz. Additional review was provided by the BMWi (Marius Backhaus, Benedikt Günter, Stephanie Lehmann, Aike Müller, Nicolas Oetzel, Maximilian Ramezani, Max Rathmann, Kenan Šehović); the Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety (Cornelia Marschel, Thomas Weber); the Federal Foreign Office (Hans Köppel, Jose Schulz, Johannes Uhl); The Jacques Delors Institute (Philipp Offenberg, Thomas Pellerin-Carlin); Clean Energy Wire (Sven Egenter); the German Renewable Energies Agency (Alexander Knebel); the German Renewable Energy Federation (Björn Pieprzyk); Agora Energiewende (Matthias Deutsch, Dimitri Pescia); the Institute for Advanced Sustainability Studies (Sybille Röhrkasten, Dominik Schäuble) and the European Commission (Alexandra Sombsthay).

The report benefited significantly from input and comments provided during an expert review workshop held in Berlin at the BMWi in September, 2015. IRENA would like to thank all those that attended for their valuable input. This report also benefited from two internal meetings with BMWi in May and August 2015, and IRENA would like to thank all attendees who participated in those meetings as well.

Valuable comments were provided by IRENA colleagues Rabia Ferroukhi, Timothy Hurst, Paul Komor, Marianne Lavergne, Elizabeth Press, Steffen Taschner, Salvatore Vinci and Dennis Volk. Lisa Mastny was the editor of this report.

IRENA is grateful for the generous support of the Federal Ministry for Economic Affairs and Energy of Germany, which made the publication of this report a reality.

Authors: Dolf Gielen (IRENA), Deger Saygin (IRENA), and Nicholas Wagner (IRENA); special thanks are due to Sven Teske.

For further information or to provide feedback, please contact the REmap team: REmap@irena.org

Report citation: IRENA (2015), Renewable Energy Prospects: Germany, REmap 2030 analysis. International Renewable Energy Agency (IRENA), Abu Dhabi, www.irena.org/remap

Disclaimer

This publication and the material featured herein are provided “as is”, for informational purposes.

All reasonable precautions have been taken by IRENA to verify the reliability of the material featured in this publication. Neither IRENA nor any of its officials, agents, data or other third-party content providers or licensors provides any warranty, including as to the accuracy, completeness, or fitness for a particular purpose or use of such material, or regarding the non-infringement of third-party rights, and they accept no responsibility or liability with regard to the use of this publication and the material featured therein.

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Germany is a leader in the global transition to a renewable energy future. With its forward-looking energy policy and decades of support for renewables, the country has played an important role in propelling clean, sustainable energy from niche technologies into the mainstream.

Germany’s energy transition, or Energiewende, is an evolving effort that engages government, private industry and civil society, and that is set to continue to 2030 and beyond. The Energiewende has become the flagship for the ongoing global energy transition and has also inspired other countries to reinforce and grow their ambitions to increase renewable energy use.

The German energy system has already been transformed by steadily increasing shares of renewables. The next 15 years, however, will demonstrate the wide-ranging implications of the Energiewende and point to the solutions Germany needs to realise its ambitious long-term energy and climate goals. Those solutions will be at the forefront of integrating new technological advances in the integration of variable renewable power, as well as innovative finance and business models, and serve as a model for global energy transition.

REmap Germany provides an overview of the progress to date in the country’s energy transition. It also identifies where further action can be taken. Germany’s ambitious goals include securing more than half of its electricity supply and just under a third of its total final energy from renewable sources by 2030. The REmap analysis – conducted by the International Renewable Energy Agency (IRENA) in collaboration with national and international experts – suggests the country has the potential to achieve an even higher level of ambition.

Germany will, however, need to make additional efforts to maximise its renewables potential, particularly if it is to harness the vast potentials of renewables for heat and transport. The expansion of the Energiewende in those sectors provides a way forward. Continued integration of European energy markets is also essential for Germany and others to fulfil their renewable energy potentials.

This report demonstrates that the benefits of the energy transition on the whole outweigh the costs. Renewable energy deployment reduces human health and environmental externalities, reduces fossil fuel imports, boosts economic growth and can cut energy system costs over the long term.

This report is based on the conclusion that Germany can continue to lead the global transition to a renewable energy future. By taking the necessary steps now, at this crucial stage in the Energiewende, the country will ultimately succeed in its goal of building a healthy, prosperous, competitive and environmentally sustainable future through renewable energy. IRENA is honoured to be working together with Germany to define this new energy paradigm.

Adnan Z. Amin Director-General IRENA

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List of figures

Figure 1: Contribution of individual countries to total global renewable energy use

of the original 26 REmap countries in REmap 2030 ...8

Figure 2: Nuclear and renewable electricity generation and major events, 1970-2025 ...15

Figure 3: Renewable energy share of Germany’s final energy consumption, 1990-2014 and targets for 2020 ...18

Figure 4: Renewable energy, energy efficiency and climate targets in Germany ...19

Figure 5: Cumulative installed capacity of renewable power, by source, 2000-2014 ...20

Figure 6: EEG remuneration and system prices ...23

Figure 7: 2013 Network Development Plan to 2023 ...25

Figure 8: Ownership structure of renewable power capacity in Germany ...27

Figure 9: Cost components of household electricity tariffs in Germany ...28

Figure 10: Breakdown of the EEG levy based on time of installations, before and after 2013 ...29

Figure 11: Average power wholesale price and EEG levy...30

Figure 12: Development of the EEG surcharge ...31

Figure 13: Schematic description of the merit-order effect ...32

Figure 14: Development of renewables-based heat consumption in Germany ...37

Figure 15: Renewable energy support in the heating sector under MAP, 2000-2013 ...38

Figure 16: Average electricity prices for households and industrial consumers, selected countries, 2013 ...39

Figure 17: Electricity prices for industrial consumers, selected countries, second half of 2014 ...40

Figure 18: Renewable energy use in Germany’s transport sector, 2000-2013 ...41

Figure 19: Germany’s greenhouse gas emissions by sector, 1990-2014 and targets for 2020-2050 ...42

Figure 20: Net balance of greenhouse gas emissions avoided by renewables in Germany, 2013 ...43

Figure 21: Price development of Clean Development Mechanism offsets and EU Emissions Trading System credits, 2008-2014 ...44

Figure 22: The build-up of surplus in the EU Emissions Trading System up to 2020 ...45

Figure 23: Import dependency as a share of primary energy consumption ...46

Figure 24: Employment in Germany´s renewable energy sector ...48

Figure 25: Reference Case developments, 2010-2030 ...54

Figure 26: Reference Case power generation developments, 2010-2030 ...54

Figure 27: Breakdown of total power generation capacity in 2030 Reference Case ...55

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Figure 29: Renewable energy overview: share of renewable energy by source, 2010-2030 ...61

Figure 30: Renewable energy additions in total final energy consumption by resource, 2010-2030 ...62

Figure 31: Renewable power capacity in 2010, the 2030 Reference Case and REmap 2030 ...62

Figure 32: Effects of REmap Options on primary energy in 2030 ...63

Figure 33: Renewable energy consumption by resource and sector in 2010, the Reference Case and REmap 2030 ...66

Figure 34: Contributions of renewable technologies to increasing renewable energy share, by resource and sector, in 2010, the Reference Case and REmap 2030 ...66

Figure 35: Technology and sector effort required to go beyond a 30% renewable energy share in total final energy consumption, 2010-2030 ...67

Figure 36: REmap Options cost supply curve, in the business perspective ...70

Figure 37: REmap Options cost supply curve, in the government perspective ...71

Figure 38: CO₂ emissions from fossil fuel combustion in 1990, 2010 and REmap 2030 ...73

Figure 39: Effect of renewable energy and energy efficiency technologies on primary energy use, 2010-2030 ...74

Figure 40: Breakdown of Germany’s total final energy consumption, including non-energy use, 2013 ...78

Figure 41: Technology breakdown and substitution costs of renewable energy shares in Germany’s building sector ...83

Figure 42: Technology and cost breakdown of renewable energy shares in Germany’s transport sector ...86

Figure 43: Breakdown of industrial energy use in Germany, 2013 ...88

Figure 44: Breakdown of industrial heat demand in Germany, 2009 ...89

Figure 45: Technology and cost breakdown of renewable energy shares in Germany’s manufacturing industry ...90

Figure 46: Wind power installed capacity shares in Europe, by country, 2014 ...94

Figure 47: Solar PV installed capacity in Europe, by country, 2000-2014 ...96

Figure 48: Solar PV cumulative installed capacity in Europe, market segmentation by country, 2014 ...96

Figure 49: Solar PV module prices, 1980-2014 ...97

Figure 50: Germany´s solar PV world market shares, 2000-2013 ...98

Figure 51: Share of renewables in EU countries, by resource, 2013 ...99

Figure 52: Number of countries with renewable energy policies, by type, 2011-early 2015 ...103

Figure 53: Deployment of renewable heating and cooling policies in IEA-RETD countries ...104

Figure 54: Mid-term (left) and long-term (right) projects under the TYNDP ...106

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List of Tables

Table 1: Structure, target audience and aim of the report ...9

Table 2: Key points of the EEG ...21

Table 3: Overview of remuneration ...22

Table 4: Overview of measures for Germany’s electricity market reform ...33

Table 5: Achievements of the Energiewende to date ...47

Table 6: Short-, medium- and long-term targets of Germany Energiewende, and REmap results ...57

Table 7: Electric vehicle deployment in REmap 2030 ...60

Table 8: REmap 2030 overview ...64

Table 9: Cost of substitution by sector and for the total energy system ...68

Table 10: Financial indicators for REmap Options, 2030 ...69

Table 11: Development of CO₂ emissions in Germany, 1990-2030 ...73

Table 12: Examples of best practices for energy efficiency and renewable energy in the building sector ...80

Table 13: Wind power installed capacity in Europe, by country, 2013 and 2014 ...95

Table 14: Renewable power capacity additions in major producing countries and regions, 2004-2014 ...99

Table 15: Renewable power installed capacity, by source, in Germany and the world, 2004-2014 ...100

Table 16: Top five renewable energy countries in the world by renewable energy investment, end-2014 ...100

Table 17: Top five renewable energy countries, by capacity additions, end-2014 ...101

Table 18: Common claims critical of the Energiewende ...111

List of Boxes

Box 1: Germany’s climate and energy legislation and milestones ...16

Box 2: Reductions in solar PV FiT costs since June 2006 ...23

Box 3: The REmap tool ...68

Box 4: Required network expansion and changes in scenarios with high renewable energy shares ...108

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EXECUTIVE SUMMARY

Germany is a world leader in its level of renewable energy deployment. Driven by a long-term renewable energy policy that dates back to the 1970s and, more recently, a nuclear power phase-out, the country is spearheading a transition to renewable energy that is commonly known as the Energiewende (“energy transition”). The Energiewende has gained broad political consensus in recent years. Its main drivers are climate change mitigation, improved energy security and industrial development.

Germany’s experience continues to attract interest in the global renewable energy community and among national policy makers, and has inspired action in many countries around the world. The German Federal Min-istry for Economic Affairs and Energy (BMWi) requested the preparation of this REmap Germany roadmap by the International Renewable Energy Agency (IRENA).

REmap is IRENA’s analytical approach for assessing how, by 2030, to close the gap between current national renewable energy plans and the realistic potential of renewable energy beyond those plans. As an intergovernmental agency with broad membership, IRENA is uniquely positioned to promote widespread adoption and sustainable use of all forms or renewable energy worldwide. To date, 38 countries participate in the REmap 2030 programme. Together, these countries represent 80% of total global energy demand.

REmap Germany highlights best practice policy and technology experiences from which others can learn. It also identifies areas where the Energiewende can be expanded, in order for Germany’s ambitious targets for renewable energy, energy efficiency and greenhouse gas emission reduction to be met by 2030. In addition, the report goes into depth on the integration of Europe’s energy markets.

Germany’s progress to date

Germany has seen tremendous growth in renewable power generation capacity. For many years, the policy instrument of choice was a feed-in tariff, but the country is now moving to introduce new instruments, includ-ing feed-in premium payments and an auctioninclud-ing system. In the power sector, the development of renewable energy has diversified the energy mix, changed ownership structures and reduced Germany’s dependence on fossil fuel imports. In addition, the renewables industry has built up a workforce of over 371 000.

Germany’s renewable power share reached more than 25% in 2014, and it exceeded 30% in the first half of 2015. The country has shown the world that such a high level of renewables can be integrated without systemic problems, thanks to strong grid infrastructure and cross-border exchange links. As Germany transitions to ever-higher shares of renewable power, beyond 50% and even higher by 2030, important grid and sector-coupling options must be considered.

For Germany to reach its target of a 30% renewable energy share in total final energy consumption (up from 10% in 2010), a systemic change involving all sectors will be required, as the power sector alone is not sufficient to transition the country’s energy system away from fossil fuels.

In the heating and transport sectors, targeted support policies have been less effective in increasing renewable energy technology deployment. Deployment of renewables for transportation has been limited in recent years, with liquid biofuel consumption remaining stable and sales of electric vehicles falling short of earlier forecasts. For industry, which is the second largest energy demand sector in Germany, no specific renewable energy market framework is in place.

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The focus with regard to energy use in buildings should first be on improvements in energy efficiency and then on the deployment of renewable systems. Germany has taken considerable steps to improve its energy efficiency and recently introduced a national action plan for energy efficiency to accelerate improvements. However, the yearly energy productivity improvement rate stands at 1.6%, compared to the target rate of 2.1%. In addition, current renovation rates represent roughly half of the 2% per year target. The existing building stock therefore will need to be renovated at a higher rate in order to meet the energy productivity improvement goal, and policies should be considered that also support the installation of renewable heating systems in renovated buildings.

Going forward, the role that renewables will play in both the power and end-use sectors will determine at what rate Germany can continue to progress towards its greenhouse gas emission reductions and ambitious renewable energy targets.

Findings from the REmap Germany roadmap to 2030

For the Reference Case, this roadmap builds on the 2014 report Energy Reference Forecasts, prepared for BMWi by Prognos AG, the Institute of Energy Economics at the University of Cologne, and the Institute of Economic Structures Research (GWS mbh).

For REmap, which aims to determine the feasible potential of renewable energy deployment, this baseline is combined with an analysis of technology options derived from a comprehensive set of data, including reports and information provided by the Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety (BMUB), BMWi, IRENA and others.

The REmap analysis shows that in the Reference Case, Germany reaches a 27% renewable energy share in the total energy mix by 2030. The Reference Case technology deployment is driven largely by renewable power generation. Solar photovoltaic (PV) applications at the utility scale and on rooftops would increase threefold, and installed wind capacity would double between 2010 and 2030. These are outcomes of policies that are focused primarily on the power sector, but that devote less attention to renewables in end-use applications for heating and cooling, as well as the transport sector.

REmap shows the potential for additional renewable deployment utilising technologies available today. Deploying higher levels of renewable power technologies, as detailed in REmap, will ensure that Germany can realise its renewable energy target of 30%. In REmap 2030, two-thirds of Germany’s total power generation is from renewables, and, even more importantly, half is from the variable renewable energy sources of solar and wind. Installed wind capacity reaches 88 gigawatts (GW), split between 72 GW onshore and 16 GW offshore. Solar PV reaches 75 GW, with more than three-quarters coming from distributed generation and over 10 GW coming from decentralised generation coupled with storage.

Importantly, REmap illustrates that there is a potential for renewables in end-use applications that is not yet fully captured by the Energiewende. If the potentials in heating and transport are utilised, Germany can increase its total renewable energy share beyond 30% of final energy. Increasing this share to between 30% and 37% will be cost-optimal depending on how the environmental benefits of individual technologies are valued and if costs are viewed from a business or a government perspective.

The technology options that enable these higher renewable shares are identified largely in the end-use sectors. Some of these technologies are more expensive than their fossil fuel counterparts when viewed from a levelised cost of energy perspective. However, these technologies (e.g., heat pumps, electric vehicles) are also enablers. They allow end-use and power sector coupling to accommodate higher shares of variable

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renewable power, thereby reducing the need for other flexibility measures. They also ensure the development of heating and transport systems that are smart and sustainable, more affordable in the long-run, and a source of future knowledge and industrial growth. Germany will need to forge new ways of valuing the costs of these energy services by taking a holistic view that includes the economy-wide and energy system benefits of these services.

The end-use sectors offer significant additional renewable potential. If all of the technology options identified in REmap are deployed, the total installed heat pump stock can grow to over 6 million units, solar water heaters can exceed 10 million square metres (m2_{) and the use of biomass for heating in industry and buildings}

can increase by 8 million tonnes per year by 2030, compared to the Reference Case. By 2030, the supply of renewable heat can more than double compared to current levels. There also are important benefits from increases in sector coupling, with the introduction of district heating systems that utilise heat pumps and solar thermal.

In the transport sector, where robust biofuel growth occurs in both the Reference Case and REmap, total biodiesel demand reaches nearly 9 billion litres and total ethanol demand reaches 3.4 billion litres, with two-thirds of this total being advanced ethanol. Electric mobility, coupled with renewable power generation, plays an equally important role, reaching 6.5 million electric vehicles by 2030. This includes not only electric vehicles and hybrids, but also e-bikes and electric vehicles used for freight transportation. By 2030, the share of the transport sector’s energy consumption that will come from renewable sources will increase fourfold over today’s levels, reaching more than 20%.

However, the deployment of many of these technologies is only beginning, and their potential, costs and synergies with other energy sectors is only starting to be understood. Importantly, as the share of electricity in final energy increases, and as this electricity is increasingly sourced from variable renewable sources, transition costs need to be better understood and analysed. These can include investments in transmission and distribution infrastructure, measures to ensure flexibility in the power system, and the development of district heating systems and charging infrastructure.

What are the cost and benefits of renewables for Germany, according

to REmap?

Achieving this transformation will require, on average, USD 15.7 billion per year of investment to 2030 in re-newable technologies (including investments for both the power and end-use sectors in both the Reference Case and REmap Options).

REmap assesses the cost of Germany’s energy system from two perspectives: business and government. The business perspective annualises renewable energy investments with a national discount rate and accounts for the annual operation and maintenance costs as well as national fuel and carbon costs. It reflects how businesses and investors would perceive the investment opportunity. From this perspective, Germany would save USD 2.4 billion annually by 2030 for the REmap renewable energy system relative to the Reference Case. This makes for a compelling case for higher renewable deployment. If these investments are viewed from the government perspective, which provides a macro-economic view and includes a higher discount rate of 10% and energy prices that exclude tax effects, renewables would have incremental costs of USD 4 billion per year in 2030.

Complementary infrastructure is not assessed, due to uncertainty about what those actual transition costs could entail. For instance, some of the end-use sector coupling technologies deployed in REmap (heat

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pumps, electric vehicles) can offer complementary services to the grid. Understanding how these services are provided, and their costs, will be crucial in the coming years to better assess the transition costs, or the savings, that can result from significantly higher renewable shares.

In both the business and government perspectives, however, a portfolio of technology options that permits a renewable share above 30% can be realised cost-optimally, when their benefits are accounted for. At a technology level, each option has the potential to bring important benefits in better energy security, improved human health and greenhouse gas mitigation. If all REmap Options were deployed, the total fossil fuel import costs in Germany would be reduced by almost USD 30 billion per year by 2030. Improved human health, from reduced outdoor air pollution, can save USD 1-2 billion per year in 2030, and climate change benefits in REmap can be valued at USD 2-8 billion per year in 2030. The total of all benefits is USD 33-40 billion per year in 2030, much higher than the total system costs of USD 4 billion when viewed from the government perspective.

In REmap 2030, energy-related carbon dioxide (CO2) emissions will decline from some 789 million tonnes

in 2010 to 540 million tonnes in the Reference Case. The REmap Options result in an additional reduction of 101 million tonnes, to 439 million tonnes in 2030, representing a 55% reduction in CO2 over 1990 levels for the

energy sectors covered in this study.

What are the challenges and solutions?

Generating 50% of electricity from variable renewable energy will require changes in the power system. After intensive discussions, Germany has decided to undertake an electricity market reform, dubbed “electricity market 2.0”, highlighting the importance of flexibility measures, including cross-border exchange, demand-side management (including smart grids/metering that incentivises customers to save energy, and other measures) and sectoral linkages between the power and end-use sectors. In particular, sectoral linkages enable important renewable energy potential and reduce the need for costly measures such as curtailment or battery storage. The use of combined heat and power (CHP) generation coupled with heat storage, heat pumps and electric vehicles all can be scheduled to accommodate the variability in solar and wind power generation.

In this context, REmap Germany shows that the largest potential for additional deployment of renewables beyond the Reference Case is in the heating and transport sectors. These sectors also will face the biggest challenges to deployment, especially because the policy focus in these areas is still somewhat limited, and progress is needed to realise further growth in renewables deployment.

The key factor for increasing both the energy efficiency of the building stock, and the deployment of renewable systems, is the rate at which old buildings are renovated. Even with a 2% per year renovation rate (in 2014, it was under 1.0%), and approximately 10% of the building stock being newly built to 2030, only about 40% of the total building stock in 2030 will have gone through some level of renovation. Therefore, additional efforts will need to be made to expand the rate of energy efficiency retrofits in old buildings, and to link these retrofits with increased renewable energy deployment.

The industry sector has very specific heating supply requirements, and today, renewables play only a modest role in supplying process heat. However, REmap shows that additional potential exists. For low-temperature heating applications, both solar thermal technology and heat pumps offer potential. Biomass is, and will remain, the largest renewable energy source, but it should be allocated primarily to applications that require

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medium- and high-temperature heat. Additionally, the possibility of further electrification of the sector for heating needs should be considered.

In the transport sector, all options need to be considered to increase the renewables share from what currently is the lowest of all sectors. Importantly, electric mobility will need to be increased, which will allow for better demand-side management of variable electricity generation. However, increased investment in charging infrastructure and incentives for electric vehicles are needed to enable this significant growth.

What does European integration mean for Germany to reach its

targets?

Germany consumes approximately 20% of the European Union’s (EU) energy, and the country will play a major role in helping the EU realise its regional energy and climate targets. Germany will not achieve its REmap 2030 potential without further market integration with the EU. Germany is at the centre of European energy markets and is linked closely with the electricity markets of its neighbours. Regional integration already is regarded as a core component to strengthen the EU’s coupled power markets. Integrated markets offer greater flexibility and balancing potential as well as gains from using smoothing effects. The next steps are finalising and implementing the 10 European network codes, taking a co-ordinated approach to strengthening grid infrastructure at the national level and expanding cross-border trade. Finally, a larger unified European market will help to reduce equipment and project costs.

Expanding the focus of Germany’s energy transition

The Energiewende is a visionary, long-term and evolving process. Its development will continue, but ensuring Germany’s aim to build one of the world’s most energy-efficient, sustainable and low-carbon energy systems will require expanding the Energiewende’s focus beyond the power sector and making deliberate efforts to link sectors that have remained largely separate. In this way, the next step of the Energiewende will define what a transition to very high shares of renewables will look like and lead the way in the global energy transition.

In making this new transition, this analysis shows that realising Germany’s climate targets and long-term renewable energy goals will require efforts in both improving energy efficiency and deploying additional renewable energy in both the power and end-use sectors.

Efficiency measures and the renewable heating sector are the potential Achilles’ heel of the Energiewende in the medium term. Renovation targets need to be met, and efficiency regulations in the building sector must be harmonised with renewables targets to achieve the best technical and economic solutions. To increase the share of renewables in heating, a combination of building-type specific efficiency and technology-neutral renewable heating targets, supported with continued finance programmes, will help to achieve both goals. The industry sector is, in large part, not yet part of the Energiewende. Therefore, benchmarks and targets need to be established for supplying industrial process heat based on renewable energy. The development of a dedicated programme to increase the uptake of renewables for process heat generation is missing and is required urgently. Innovative policy approaches need to ensure continued competitiveness for the sector. The transport sector will be among the most challenging areas for the future of the Energiewende. The uptake of electric vehicles in Germany is progressing slowly, and specific policy measures for electrification are required that also incentivise investments in charging stations and their access and use by all. Advanced

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biofuels represent an important enabling technology for applications such as aviation and freight. The technologies exist to use non-food feedstocks to provide biofuels, but costs need to be driven down through economies of scale. To utilise the limited availability of biomass resources in the most sustainable and cost-ef-fective way across competing uses, a Germany-specific bioenergy resource plan needs to be developed. The new power market design that is being planned in Germany should create business opportunities for heating storage and demand-side management technologies as well as sectoral linkages to support grid integration of renewable power supply. Regular reviews are needed to ensure its effectiveness.

The Energiewende in Germany will influence international energy markets. The EU electricity market needs to finalise implementation of the 10 network codes and to facilitate investments in transmission infrastructure. The EU member states need to develop and co-ordinate mechanisms to address energy security situations, update market design to deliver secure and affordable energy supply, and foster research, development and deployment (RD&D) in transmission networks.

To date, Germany has played a remarkable leadership role in the promotion of renewables in the international arena. It now has the opportunity to show the world what the true energy system of the future will be. The country has started on a process that will continue for years to come, and will require constant evolution. In making this contribution to the German debate, it is the hope of IRENA that with the solutions outlined in this report, Germany can realise its full renewable energy potential and, in the process, continue to forge best practices, create awareness and spread knowledge worldwide, and remain a pioneer in the renewable energy field.

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REmap 2030 is the result of a collaborative process between IRENA, national REmap experts within the 38 participating countries1_{and other stakeholders. The}

current report focuses on the actual and potential role of renewable energy in Germany, the largest energy user in the European Union (EU). In 2010, Germany had a total final energy consumption (TFEC2_{) of 9.6}

exa-joules (EJ), equivalent to 2.6% of global TFEC. About half of Germany’s TFEC was consumed in the building and services sectors, with the remainder consumed largely in the industry and mining sectors (28%) and the transport sector (27%) (AGEB, 2010; IEA, 2013).

The expansion of renewable energy has made Germany a European and international pioneer in energy, climate and innovation policy. The country’s Energiewende (“en-ergy transition”) includes decentralised power solutions that are focused heavily on solar and wind power, the deployment of large-scale renewable energy systems such as offshore wind parks, and cross-cutting sectoral approaches, with the aim of expanding renewable ener-gy in sectors beyond the power sector.

Germany’s TFEC is projected to decrease by 20% be-tween 2010 and 2030. In the same time period, based

1 The 38 REmap countries (as of November, 2015) account for eighty percent of global TFEC. TFEC includes the total combustible and non-combustible energy use from all energy carriers as fuel (for the transport sector) and to generate heat (for industry and the building sector) as well as electricity and district heat. It excludes non-energy use. This report uses TFEC to measure the renewable energy share, consistent with the Global Tracking Framework report (World Bank, 2013). In this study, TFEC includes only the consumption of the industry (including blast furnaces and coke ovens, but excluding petroleum refineries), building (residential and commercial) and transport sectors. In this same year, the non-energy use in Germany was about 10% from total final con-sumption (TFC), which includes both the energy and non-energy use of energy carriers.

2 The REmap methodology uses TFEC; however, the EU measures renewable energy shares in terms of gross final energy con-sumption (GFEC). GFEC includes energy commodities delivered for energy purposes to industry, transport, households, services (including public services), agriculture, forestry and fisheries, including the consumption of electricity and heat by the energy system for electricity and heat production and including losses of electricity and heat in distribution and transmission. It excludes transformation losses. In this study, comparisons are made to TFEC; however, results for total renewable share in GFEC are also provided.

on current policies (or the “Reference Case”, according to this study), Germany’s share of renewable energy in TFEC will grow from 10.5% to 27% in 2030, below the country’s target of 30%. Germany has the potential to go beyond its Reference Case developments.

According to the REmap analysis carried out by IRENA with input from external stakeholders, Germany could reach a 37% renewable energy share in TFEC by 2030 if the realisable potentials of all renewable energy technol-ogies identified in REmap are deployed. The technology potentials to realise this higher share are called the “REmap Options”. If only the power sector technologies are deployed, then the share would increase to 30%; the remaining technologies to increase the renewable energy share to 37% are found in the end-use sectors (buildings, industry and transport).

Depending on the technology mix, the portfolio to go beyond a 30% share may have additional costs to Germany’s energy system. In the power sector, the renewable energy share will increase to 65% by 2030, an almost threefold increase over 2014 levels. The available renewable energy resources include mainly solar, geothermal, biomass, wind and hydro. The first three can be used either for power or heat generation, depending on resource availability and the technologies implemented.

This national potential for renewables contributes to the global renewable energy share. Figure 1 provides a breakdown of total renewable energy use among the original 26 REmap countries that have developed REmap Options by June, 2014. Germany accounts for 2% of the identified renewable energy potential in the original 26-country grouping. The number of REmap countries has since expanded to 38 countries as of October, 2015.

As of mid-2015, IRENA had released six REmap country reports, providing detailed background data and the results of REmap country analyses for China, Mexico, Poland, Ukraine, the United Arab Emirates and the United States and making suggestions for translating the results into action. For each country, the reports

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discuss in detail the latest developments in renewable energy markets, the renewable energy policy frame-work, business-as-usual renewable energy use to 2030, and the realistic potential and costs and benefits of renewables beyond business as usual. Based on these findings, the reports end with policy recommendations for how countries can accelerate the uptake of renew-able energy use by 2030.

Compared to most countries, Germany is unique in terms of its advanced renewable energy policy, with the so-called Energiewende that aims to transform the country’s energy system. In view of the specific case of Germany, the aims of this report are: 1) to provide an objective overview of the Energiewende to inform countries about Germany’s experiences and best practices, 2) to identify the role of individual sectors in realising Germany’s energy transition and its ambitious

renewable energy goals, based on IRENA’s global assessment of countries and the existing renewable energy projections, and 3) to discuss Germany’s role in the context of EU energy and climate targets.

This report begins with a brief description of the REmap 2030 methodology (section 2). It continues by explain-ing the current policy framework and providexplain-ing an overview of the Energiewende up until today (section 3). Section 4 provides the details of Germany’s busi-ness-as-usual (“Reference Case”) and renewable energy potentials (“REmap 2030”) to 2030, as well as the challenges associated with achieving higher renewables deployment. Section 5 discusses these findings in the European and international contexts. Section 6 con-cludes with findings from the analysis for Germany, the EU and other countries and outlines the key take-away topics of the report.

Figure 1: Contribution of individual countries to total global renewable energy use of the original 26 REmap countries in REmap 2030

Note: The total global renewable energy use of the original 26 REmap countries represents 75% of global final energy consumption. 23%

8

Rest of the World (traditional uses of biomass)

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Table 1: Structure, target audience and aim of the report

Section Section focus Target audience Key take-away topics

3

Germany’s current policy framework; detailed sum-mary of the Energiewende

Policy makers and private sector representatives outside of Germany who are interested in best practices from Germany policy making

German policy makers interested in areas where renewable energy is not addressed in the existing Energiewende approach

● Brief history of Germany’s renewable

energy policy

● Germany’s experiences with the

Energiewende

● Other aspects of Germany’s energy

policy, such as energy security and climate change

● Effects of higher renewable energy

deployment on various aspects of the economy

4

A view to the year 2030: renewable energy poten-tial, costs and benefits, sector and technology perspectives; discussion of challenges and solutions in achieving accelerated renewable energy uptake; in depth discussion on importance and needs for renewables in the end-use sectors

Policy makers and private sector representatives in Germany

● Renewable energy deployment if

Germany were to follow business as usual to 2030

● What does the additional potential

look like (by technology, sector) to reach a 37% renewables share in TFEC by 2030?

● What does realising this potential

imply in terms of cost and benefits and efforts required by sector?

● The importance of the end-use

sectors in enabling higher renewable energy deployment, and some of the challenges and needs for realising deployment of renewables in heating and transport

● Summary of challenges arising from

accelerated renewable energy uptake

5 Germany’s role in the context of the European and international renewable energy sectors; actions needed at the European level, and Germany’s role in realising higher shares of renewables; international perception of the Ener-giewende; Germany’s role in international co-opera-tion for renewables

Policy makers and stake-holders along the power supply chain in Germany, Europe and internationally

● Germany’s contribution to renewables

deployment in Europe and the world

● Regional integration actions in Europe

to realise higher shares of renewables in Germany and the EU

● How the Energiewende is viewed by

other countries

● Germany’s role so far in the

interna-tional setting for renewables

6

High-level summary, learnings and key take-aways based on Sections 3-5

Policy makers in Germany, Europe and internationally

● Next steps for the Energiewende ● Power sector and market design ● Heating and cooling sectors ● Transport sector

● Regional integration and infrastructure ● Sectoral linkages

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EU member states were required to submit National Renewable Energy Action Plans (NREAP) in 2009 that detail sectoral targets and the technology mix, the general trajectory that countries will follow, and the measures and reforms that they will undertake to overcome the barriers to developing higher levels of renewable energy use. The EU and its member states have adopted a 2030 framework, but as of 2015 they were still discussing how this can be implemented effectively. Germany is one of the few EU countries that has renewable energy plans to and beyond 2030.

The REmap analysis first assesses current energy devel-opments to 2030 (the Reference Case), then identifies a pathway for accelerated renewable energy potential known as the REmap Options. For an analysis of the Reference Case for Germany, IRENA used the report Entwicklung der Energiemärkte – Energiereferenz-prognose (“Energy Market Developments – Energy Reference Forecasts”) (Prognos, EWI and GWS, 2014), hereafter referred to as either the Reference Case, or Energy Reference Forecasts. This report includes policies made by the German government as of mid-2014. Since then, additional policies have been passed, mainly a reform to the Renewable Energy Act (Erneuer-bare-Energien-Gesetz, or EEG, of 2014), and additional measures have been proposed, such as reform of the German power market and a National Action Plan on Energy Efficiency (NAPE).

In the Reference Case, Germany sees significant chang-es to its energy system. TFEC declinchang-es by 12% between 2010 and 2020 and then by a slightly slower 8% be-tween 2020 and 2030, resulting in a total reduction of 20% from the 2010 level. Despite the decline in energy demand, the use of renewable energy increases in all sectors, with more than half of power generation coming from renewables. The building sector and the district heating sector see the next-highest gains in the share of renewables, and the industry and transport sectors see the least.

After the Reference Case was prepared, the potential for accelerated renewable deployment was explored. The technology options that were identified in this analyses This section explains the REmap 2030 methodology and

summarises the background data used for the analysis of Germany. The report’s annexes provide greater detail on these background data.

REmap is an analytical approach for assessing the gap between current national renewable energy plans, additional renewable technology options which can be realistically deployed by 2030 and the United Nations Sustainable Energy for All (SE4ALL) objective of dou-bling the share of global renewable energy by 2030 (IRENA, 2014a).

As of November 2015, the REmap 2030 programme assesses 38 countries: Argentina, Australia, Belgium, Brazil, Canada, China, Colombia, Denmark, the Do-minican Republic, Ecuador, Egypt, Ethiopia, France,

Germany (the present analysis), India, Indonesia,

Iran, Italy, Japan, Kazakhstan, Kenya, Malaysia, Mexico, Morocco, Nigeria, Poland, Russia, Saudi Arabia, South Africa, South Korea, Sweden, Tonga, Turkey, Ukraine, the United Arab Emirates, the United Kingdom, the United States and Uruguay.

The analysis starts with national-level data covering end-use demand sectors (buildings, industry, transport, agriculture) as well as the supply sectors of power and district heat. Current national plans using 2010 as the base year of this analysis are the starting point. However, the energy landscape in Germany is constantly evolving during a time of Energiewende, or energy transition.

The German government’s “Energy Concept” (BMWi and BMU, 2010) provides the long-term (to 2050) polit-ical timetable for the transition of the country’s energy supply system. However, under EU law, EU member states are obligated to renewable energy commitments on the EU level as a whole by 2020. EU member states must set national targets to achieve the EU targets. These so-called “20-20-20” targets include increasing the share of renewable energy in GFEC to 20%, reducing the EU’s greenhouse gas emissions by 20% from 1990 levels, and reducing the EU’s total primary energy consumption (compared to projected development) by 20%.

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already or could be cost-effective compared to conven-tional technologies by 2030 as a result of technological learning and economies of scale.

Based on the substitution cost and the potential of each REmap Option, country cost supply curves were developed from two perspectives for the year 2030: government and business. In the government perspec-tive, costs exclude energy taxes, subsidies and a CO2

price, and a standard 10% discount rate is used which allows for comparison of the cost and benefits across all REmap countries; the government perspective shows the cost of doubling the global renewable energy share as governments would calculate it. For the business perspective, the process was repeated using national prices that include, for example, energy taxes or subsi-dies, a CO2 price applied to all fossil fuels, and a national

cost of capital of 6% for Germany in order to generate a localised cost curve. This approach shows the cost of the transition as businesses and investors would calculate it.

Assessments of all additional costs related to com-plementary infrastructure, such as transmission lines, reserve power needs, energy storage or fuel stations, are excluded from this study. However, where relevant, a discussion is included on the implications of infrastruc-ture needs on total system costs based on a review of comparable literature.

Throughout this study, renewable energy share is es-timated by comparison with TFEC. Based on TFEC, the renewable energy share can be estimated for the total of all end-use sectors of Germany, or for each of its end-use sectors (with and without the contribution of renewable electricity and district heat). The share of renewable power generation is also calculated. Further details of the REmap 2030 methodology can be found online at www.irena.org/remap.

This report also discusses the finance needs and avoid-ed externalities relatavoid-ed to increasavoid-ed renewable energy deployment. Three finance indicators are developed – incremental system costs, total investment needs and subsidy needs – and are defined briefly as follows:

● Incremental system costs: The sum of the

dif-ferences between the total capital (in USD per year) and operating expenditures (in USD per year) of all energy technologies based on their are called the REmap Options and the case where they

are included is called REmap 2030. For this analysis, IRENA used the “Target Case” from the Energy Refer-ence Forecasts as well as the Projektionsbericht (BMUB, 2015), known hereafter as the Projection Report, which includes the changes found in the EEG 2014 law. Other sources included IRENA publications and analysis as well as material from other agencies, organisations and studies. The report annex provides a detailed overview of the sources used for the analysis.

The choice of an options approach instead of a scenari-os approach is deliberate: REmap 2030 is an exploratory study, not a target-setting exercise.

IRENA developed a REmap tool that allows staff and external experts to input data in an energy balance for 2010, 2020 and 2030 and then to assess technology options that are consistent with an accelerated deploy-ment of renewable energy that could take place by 2030. In addition to what is provided in the annexes of this report, a detailed list of these technologies and the related background data are provided online. The tool includes the costs (capital, operation and maintenance (O&M)) and technical performance (reference capacity of installation, capacity factor and conversion efficiency) of renewable and conventional (fossil fuel, nuclear and traditional use of biomass) technologies for each sector analysed: industry, buildings, transport and power.

Each REmap Option is characterised by its substitution cost. Substitution costs are the difference between the annualised cost of the REmap Option and the cost of a conventional technology used to produce the same amount of energy, divided by the total renewable energy use in final energy terms (in 2010 real US dollars (USD) per gigajoule (GJ)3_{of final renewable energy).}

This indicator provides a comparable metric for all renewable energy technologies identified in each sector. Substitution costs are the key indicators for assessing the economic viability of REmap Options. They depend on the type of conventional technology substituted, energy prices and the characteristics of the REmap Op-tion. The cost can be positive (incremental) or negative (savings), as many renewable energy technologies are

3 1 gigajoule (GJ) = 0.0238 tonnes of oil equivalent (toe) = 0.0341 tonnes of coal equivalent (tce) = 0.238 gigacalories (Gcal) = 278 kilowatt-hour (kWh) = 0.175 barrel of oil equivalent (BoE) = 0.947 million British thermal units (MBtu). In 2010, USD 1 was equivalent to EUR 0.752.

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deployment in REmap 2030 and the Reference Case in the period 2010-2030 for each year.

● Total investment needs: The annual investment

needs of all REmap Options and the investment needs required in the Reference Case. Renew-able energy investment needs are estimated by multiplying total deployment of each technology (in GW) to deliver the same energy service as conventional capacity by the investment costs (in USD per kilowatt (kW)) for the period 2010-2030. This total is then annualised by dividing the number of years covered in the analysis.

● Subsidy needs: Total subsidy requirements for

renewables are estimated as the difference in the delivered energy service costs for the REmap Option (in USD per GJ of final energy) relative to its conventional counterpart, multiplied by its deployment in a given year (in petajoules (PJ) per year).

External effects related to greenhouse gas emission reductions as well as improvements in outdoor and indoor air pollution from the decreased use of fossil fuels are also estimated.

As a first step, for each sector and energy carrier, greenhouse gas emissions from fossil fuel combustion are estimated. For this purpose, the energy content of each type of fossil fuel was multiplied by its default emission factors (based on lower heating values, LHV) as provided by the Intergovernmental Panel on Climate Change (IPCC, 2006). Emissions were estimated

separately for the Reference Case and REmap 2030. The difference between the two estimates yields the total net greenhouse gas emission reduction from fossil fuel combustion due to increased renewable energy use. To evaluate the related external costs related to carbon emissions, a carbon price range of USD 20-80 per tonne of CO2 is assumed (IPCC, 2007).

This range was applied only to CO2 emissions, not

to other greenhouse gases. According to the IPCC (2007), the carbon price should reflect the social cost of mitigating one tonne of CO2-equivalent greenhouse

gas emissions.

The external costs related to human health are estimat-ed in a separate step, which excludes any effect relatestimat-ed to greenhouse gas emissions. Outdoor air pollution is evaluated from the following sources: 1) outdoor emission of sulphur dioxide (SO2), nitrogen oxides (NOx)

and particulate matter of less than 2.5 micrometres (PM2.5) from fossil fuel-based power plant operation,

and 2) outdoor emissions of NOx, and PM2.5 from road

vehicles. To evaluate the external costs related to out-door emission of SO2, NOx and PM2.5 from fossil power

plant operation, the following parameters for respective pollutants were used: 1) emission factor (i.e., tonne per kWh for 2010 and 2030 taken from the IIASA GAINS database (ECRIPSE scenario) (IIASA, 2014), and 2) unit external costs (i.e., Euro-per-tonne average for the EU) (AEA, 2005).

An extended version of the REmap methodology can be found online at www.irena.org/remap.

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3 GERMANY’S ENERGIEWENDE:

MARKET FRAMEWORKS AND

ECONOMIC RESULTS

Key Points

Energiewende: progress to date

● Renewable energy policy in Germany dates back to the 1970s, and the phasing out of nuclear power has been

an important driver for renewables deployment. The nuclear phase-out was very controversial in German politics between 1980 and 2011, but the Energiewende has gained broad political consensus in recent years.

● Germany’s climate and renewable energy policy has been triggered as a result of domestic as well as European

and international climate and energy policy.

● Germany is unique in terms of its advanced renewable energy policy. The Energiewende aims to transform the

country’s energy system based on the two pillars of renewable energy and energy efficiency. Other important focuses include future grid, markets and system integration as well as support for energy sector research and development (R&D).

● The drivers for the Energiewende include climate protection, energy security, industrial development,

employment and the phase-out of nuclear power.

● Germany’s electricity feed-in tariff (FiT) policy has been effective, as it has led to tremendous growth in

national renewable power generation capacities. Energy efficiency is envisaged to be accelerated by the recently introduced NAPE. Targeted support policies for the heating and transport sectors have been less effective, and no specific renewable market framework is in place for the manufacturing sector.

● In the electricity sector, the development of renewables has diversified the energy mix and ownership

structures, slowed Germany’s growing import dependence and expenditures, built up a workforce of over 371 000 and had impacts on national, European and international climate policy.

● Growth in renewable power in Germany has increased significantly, with the renewable share in gross electricity

consumption increasing from 6.2% in 2010 to 17% in 2010, 27.8% in 2014 and over 30% in the first half of 2015.

● Despite cost increases to consumers, the Ener giewende continues to enjoy strong public support in Germany,

as 80-90% of citizens are in favour of the Energiewende’s goals.

End-use sectors: heating, cooling, transport

● The renewable heating market, supplied mainly by biomass, has grown much slower than renewables for

power generation. Growth in biomass heat slowed greatly in recent years, whereas geothermal and heat pumps grew the most rapidly and overtook solar water heaters in 2009.

● The Renewable Energy Heat Act that came into force in 2009 requires new buildings to obtain a share of

their total heating/cooling demand from renewables. The Market Incentive Program aims to complement the Renewable Energy Heat Act by implementing renewables in existing buildings.

● The Biofuels Quota Act required a minimum biofuels share of 6.25% to be used in road transport starting in

2010. The act was replaced in early 2015 with the Climate Protection Quota, which specifies the minimum contribution of biofuels to reduce greenhouse gas emissions based on a reference fuel value; currently, that reduction is 3.5%.

● Biodiesel is the dominant renewable fuel for transportation. Although the use of biodiesel made from

rapeseed (canola) grew significantly in 2004-2007, market volumes decreased rapidly to 2014, to less than 1% of the market volume.

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Germany is unique in terms of its advanced renewable energy policy. The Energiewende aims to transform the country’s energy system based on the twin pillars of re-newable energy and energy efficiency. The Energiewende is a change in Germany’s policy direction and detailed regulations. It is designed to trigger change in the energy system and in energy technologies – mainly through the shift from conventional to renewable energy – for smart energy use and better consumer participation coupled with the implementation of energy efficiency measures.

The Energiewende is a long-term and evolving process. The “Energy Concept”, adopted in 2010, and earlier efforts dating back to the 1990s have resulted in the considerable success of renewable energy deployment in Germany, particularly in the power sector. More than 27% of the country’s gross electricity consumption was from renewable sources by the end of 2014, and that share surpassed 30% in the first half of 2015. Nearly 15% of total generation is from variable wind and solar power.

Germany is now entering the next phase of its Ener-giewende. This phase will focus on how higher shares of

wind and solar can be accommodated and how the grid infrastructure also can be expanded to ensure that the power system and its actors are more flexible to allow for the integration of electricity from renewables. As part of the continuing transition, the deployment of renewables in the end-use sectors of heating, cooling and transport, as well as the synergies between power and end-use sectors, will be key.

To date, much has been published already by German me-dia, research organisations and other stakeholders taking part in this transition. The Energiewende has attracted huge interest from many other countries as well. Countries want to learn best practice technology and policy infor-mation from Germany’s experiences on how to implement higher shares of renewables, and where challenges or missteps have occurred. This section summarises the most relevant issues related to the Energiewende that could be of interest for countries that are starting or continuing with their own energy transitions.

The purpose of this section is to present the history of Germany’s renewable energy policy, to elaborate on the

Costs

● The Renewable Energy Act (EEG) required a major reform in 2014 to 1) steer development of renewables,

2) slow the rise in costs, 3) distribute the financial burden and 4) improve market integration. In 2014, the EEG surcharge for households was EUR 6.24 cents per kWh, excluding the 19% value-added tax (VAT). Energy-intensive industry that purchases its electricity from the wholesale market is partially exempt from this surcharge. In 2014, wholesale electricity prices declined to EUR 3.79 cents, from EUR 5.43 cents in 2011.

● Without the Energiewende, fossil fuel import costs, which represent some 3% of Germany’s gross national

product, would be even higher.

Energiewende: key findings and tasks for today’s decision makers

● Germany’s ambitious greenhouse gas emission reduction targets may not be reached without further

significant efforts in all sectors.

● German decision makers are tasked with transforming into action the recently developed (July 2015)

guidelines of future energy policy for the Energiewende, with key points addressing the mitigation of climate change, increased energy efficiency, enhanced electricity market design, energy security, CHP and financial reserves for nuclear power.

Evaluation and next steps

● Because the Energiewende has impacts on European economies and energy sectors, and because regional

approaches can ease the energy sector transition, Germany will need to strongly support the strengthening of regional energy market frameworks and electricity market structures.

● The strengthening of the EU Emissions Trading System (EU ETS) will be required, as it is a climate policy

measure that has strong impacts on energy markets and technology choice.

● As an ongoing process, the Energiewende requires constant monitoring, and the adjustment of market

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principles, objectives, achievements, cost and benefits of the Energiewende, and to identify the areas that require further attention in order for Germany to realise its renewable energy, energy efficiency and climate change goals by ensuring a secure and affordable energy system. In section 4, a quantitative assessment explores how these additional potentials can be closed from a sectoral and technology perspective and what the benefits and costs of this would look like. This section ends with a brief summary of learnings for policy makers both in Germany and rest of the world.

Much of the information in this section came from literature and experiences provided by BMWi, Agora Energiewende and other authoritative institutions in this field.

3.1 The Energiewende and the

evolution of Germany’s

renewable energy policies

History of the Energiewende, its principles and

goals

The oil crisis in the 1970s, as well as the controversial de-bate about nuclear power in Germany, triggered increased R&D of renewable energy technologies – especially

onshore wind – in recent decades. In addition, the need to reduce CO2 emissions to meet climate protection goals

has put renewable energy (in combination with energy efficiency) at the centre of Germany’s energy debate. In 2000, Germany decided to phase out nuclear power, a decision which was re-enforced in April 2011 in response to the nuclear accident in Fukushima, Japan.

The nuclear phase-out was very controversial in German politics between 1980 and 2000, but the Energiewende has gained broad political consensus. Germany has adopted concrete plans for gradually phasing out nuclear power by 2022, based on two pillars: energy efficiency improvements and the accelerated expansion of renewable energy.

The guiding principles of Germany’s Energiewende, as documented in the report Energy Concept for an Environmentally Sound, Reliable and Affordable Energy Supply (BMWi and BMU, 2010; BMWi, 2015a) are:

● Restructuring of fossil fuel power plants

● More rapid expansion of renewable energy and

its integration into the energy system

● Wind energy as a central component ● Expansion of electricity grids ● Smart grids and storage facilities ● Energy-efficient buildings

Figure 2: Nuclear and renewable electricity generation and major events, 1970-2025

Renewable energy

1991: Renewable 2000:

Energy Act (EEG)

1st_{law on feed-in tariffs}

2010: Energy Concept 2014: Renewable Energy Act 2.0 (EEG 2.0) 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 350 300 250 200 150 100 50 0

Electricity production (TWh/year)

Important policies and historical events

Nuclear Renewable power Nuclear energy 1976: Start of the Anti-Nuclear Movement 1986: 2010: Revision of the 1st_Nuclear Phase-Out Law 2011: 2nd_Nuclear Phase-Out Law

Chernobyl accident Adopted

2011: Fukushima Accident 2002: Nuclear 1st Phase-Out Law

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● European initiatives for energy efficiency ● Efficient procurement

● Cost efficiency

Figure 2 shows the important policies and major histor-ical events related to Germany’s nuclear and renewable energy development since 1970. Until the early 1990s,

nuclear power generation increased, while renewable generation remained more or less constant. From 1990 onwards, however, the situation reversed, with nuclear generation remaining constant and generation from renewables growing. According to Germany’s nuclear phase-out law, the country’s last nuclear reactor will be switched off by 2022. A mix of onshore and offshore

Box 1: Germany’s climate and energy legislation and milestones

Germany´s climate and renewable energy policy has been triggered as a result of domestic as well as Euro-pean and international climate and energy policies. Important milestones that have contributed to Germany’s policy decisions since 1990 include:

1991 – Germany’s first law on feeding renewable energy into the electricity grid enters into force on 1 January

(Stromeinspeisungsgesetz = Electricity Feed-in Law).

1992 – Germany is among the 154 countries to sign the United Nations Framework Convention on Climate

Change (UNFCCC) in Rio de Janeiro, Brazil.

1998 – Germany signs the Kyoto Protocol, committing the country to a 21% reduction in greenhouse gas

emissions.

1998 – The German Energy Industry Act (Energiewirtschaftsgesetz) comes into force and is directed towards

power market liberalisation and implementing the EU directive concerning common rules for the internal market in electricity.

2000 – The Renewable Energy Act (Erneuerbare-Energien-Gesetz, or EEG) is adopted, serving as the basis

for today’s renewable energy support mainly by stipulating feed-in tariffs that enable grid operators to directly pass through costs to consumers.

2002 – Germany passes the Nuclear Energy Act, aimed at reducing dependence on nuclear energy.

2005 – The EU ETS starts, as part of the EU’s efforts to fulfil Kyoto commitments on emission reductions. It

covers around 45% of the EU’s greenhouse gas emissions. In 2020, emissions from sectors covered by the EU ETS will be 21% lower than in 2005.

2007 – Germany decides on key points of an integrated energy and climate programme.

2008 – The German government adopts its adaptation strategy to climate change, which lays the foundation

for a medium-term process to progressively identify the effects of global climate change, assess the risks, and develop and implement adaptation measures.

2009 – The EU agrees on a comprehensive climate and energy package, “Energy 20-20-20”, with targets for

emission reduction, energy efficiency and renewable energy deployment to 2020.

2009 – The EU renewable energy directive, as part of the Energy 20-20-20 package, is adopted. It sets

mandatory national targets consistent with a 20 % share of energy from renewable sources and a 10 % share of energy from renewable sources in transport in EU energy consumption by 2020. All EU member states are required to adopt National Renewable Energy Action Plans (NREAPs), setting out Member States’ national targets for the share of energy from renewable sources consumed in transport, electricity, and heating and cooling in 2020.

RENEWABLE ENERGY PROSPECTS: GERMANY

GERMANY